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What is the net present value of the equipment

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Reference no: EM131599797

Sure-Lock Ltd. is purchasing new equipment at a cost of $325,000. The equipment will yield incremental cash flows of $100,000 in the first year of its operation. After that, the incremental cash flows will decrease at a rate of 10% per year. The equipment is expected to last for 6 years, and will be worthless at the end of its life. What is the net present value of the equipment, given that the required rate of return is 15%?

A. $16,903

B. −$53,448

C. −$16,903

D. $53,448

E. $75,000

Reference no: EM131599797

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